Mike Phillips

Mike Phillips inquired if there were any changes in assumptions within the construction liability segment that impacted the current year's loss pick and asked about the excess casualty segment's growth opportunities and loss trends.

Answer

Michael Kehoe, CEO and Chairman, stated no specific changes in construction liability assumptions, noting quarterly loss reserve reviews and overall positive loss performance. Stuart Winston, EVP and Chief Underwriting Officer, reported strong rates and good growth opportunities in excess casualty, particularly in lead or first $10 million placements, despite some pressure at high excess attachment points.

Mike Phillips of Oppenheimer & Co. Inc. inquired about the operational impacts of expanding into Florida's Tri-County region, specifically regarding claims personnel and philosophy. He also asked about the sustainability of the company's low core loss ratio in light of recent rate cuts and the competitive environment.

Answer

President Jon Ritchie stated that the company's platform is built to scale and no material changes to staffing or operational expenses are anticipated for the Tri-County expansion. Founder and CEO Bob Ritchie added that their distribution network is already in place. Regarding the loss ratio, Jon Ritchie explained that while they believe the full benefit of legislative reform is reflected in current pure premium trends, severity has flatlined. Bob Ritchie noted that future improvements could come from external factors like lower reinsurance costs.

Mike Phillips of Oppenheimer & Co. Inc. asked about the operational impacts of expanding into the Tri-County region and the sustainability of the company's low core loss ratio.

Answer

President Jon Ritchie stated that the company's platform is built to scale and does not anticipate material changes to staffing or operational expenses for the Tri-County expansion. Regarding the loss ratio, both Jon Ritchie and Founder & CEO Bob Ritchie explained that while they believe current results reflect the full benefit of legislative reforms on a pure premium basis, future improvements could come from factors like lower reinsurance costs.

Mike Phillips inquired about the normalization of the claims environment, specifically regarding current litigation frequency trends, and asked about the company's strategy for expanding into Broward and Miami-Dade counties.

Answer

Founder & CEO Robert Ritchie and President Jon Ritchie responded. Robert Ritchie stated that litigation trends saw an immediate and significant reduction following the December 2022 reforms, with new lawsuits dropping and a hastened finalization of the existing inventory. Jon Ritchie added that this reduction in litigation frequency was observed in both non-catastrophe and catastrophe claims. Regarding expansion, Robert Ritchie detailed a strategy for entering South Florida by leveraging existing new homebuilder agent relationships and appointing new agents, all while maintaining strict underwriting standards.

Mike Phillips of Oppenheimer & Co. Inc. asked for details on the normalization of the claims environment, specifically regarding litigation frequency and its potential impact on pricing and reserves. He also inquired about the company's strategy for expanding into Broward and Miami-Dade counties.

Answer

Founder & CEO Robert Ritchie and President Jon Ritchie explained that litigation frequency dropped significantly immediately following the December 2022 legislative reforms, leading to a more favorable claims environment. Robert Ritchie then detailed the South Florida expansion strategy, which leverages existing new homebuilder agent relationships and national distributors, supported by a dedicated territory manager to thoughtfully appoint new agents without altering underwriting standards.

Mike Phillips from Oppenheimer & Co. Inc. asked about the potential benefits for Homeowners Choice once it is independent from Exeo, the current pricing environment in the condo business, and sought confirmation on reserve development since Q4.

Answer

Chairman & CEO Paresh Patel explained that separation allows the insurance business to focus on its own opportunities as a pure-play insurer in a volatile national P&C market. He also confirmed the commercial residential market remains soft but is not a significant issue for HCI. CFO Mark Harmsworth confirmed there have been no significant reserve adjustments since the last reported quarter.